Defining Disability

• Disability is defined as an impaired condition or function. This can include chronic disease, physical impairment, cognitive or mental impairment, and hearing or vision impairments. When a person is considered legally disabled and eligible for disability benefits, she might be classified as temporarily or permanently disabled, depending on the type and severity of her condition or impairment.
  
  

Disability Tax Law

• Disability tax law in the United States allows eligible individuals to receive disability benefits without paying taxes on them as long as these benefits are the individual's only source of income. If the individual receiving disability benefits also receives income from other sources, including self-employment earnings, pensions and disability insurance benefits, he will be required to pay taxes on a portion of his Social Security disability benefits.
  
  

Disability Tax Law Liabilities

• The maximum amount of Social Security disability benefits that can be taxed is 85 percent. The maximum amount applies to people who file as individuals but have a combined income between $25,000 and $35,000. Disability tax liabilities for individuals who make less than $25,000 depend on their total income, filing status, and eligibility for the elder and disability tax credit.
  
  

Elder And Disability Tax Credit Eligibility For Disabled Individuals

• If you are disabled and cannot work, you might be eligible for the disability tax credit, sometimes also referred to as the elder and disability tax credit. To meet the conditions for the credit based on disabled status, you must be unable to work because of a permanent and total disability, you must be receiving disability benefits and be younger than the age of 65, and you must meet certain income eligibility requirements. If you qualify for the tax credit, the amount that you qualify for will be determined by how closely you meet these requirements.
  
  

Elder And Disability Tax Credit Eligibility For People Aged 65 And Older

• If you are 65 years old or older, you might qualify for the elderly and disability tax credit if you meet certain requirements. Individuals and couples 65 and older can qualify if they:
  
  Have an adjustable gross income of $25,00 or less for couples or $17,000 for individuals.
  
  Have received no more than $7,500 in non-taxable Social Security benefits for couples, or $5,000 for individuals.
  
  Are a U.S. resident or citizen
  
  Ask your tax preparer for more advice.